Correlation Between T3 Entertainment and Samsung Life

Can any of the company-specific risk be diversified away by investing in both T3 Entertainment and Samsung Life at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining T3 Entertainment and Samsung Life into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between T3 Entertainment Co and Samsung Life Insurance, you can compare the effects of market volatilities on T3 Entertainment and Samsung Life and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in T3 Entertainment with a short position of Samsung Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of T3 Entertainment and Samsung Life.

Diversification Opportunities for T3 Entertainment and Samsung Life

0.6

Correlation Coefficient

T3 Entertainment  Samsung Life

Poor diversification

The 3 months correlation between 204610 and Samsung is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding T3 Entertainment Co and Samsung Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Life Insurance and T3 Entertainment is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on T3 Entertainment Co are associated (or correlated) with Samsung Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Life Insurance has no effect on the direction of T3 Entertainment i.e., T3 Entertainment and Samsung Life go up and down completely randomly.

Pair Corralation between T3 Entertainment and Samsung Life

Assuming the 90 days trading horizon T3 Entertainment is expected to generate 2.4 times less return on investment than Samsung Life. But when comparing it to its historical volatility, T3 Entertainment Co is 1.24 times less risky than Samsung Life. It trades about 0.04 of its potential returns per unit of risk. Samsung Life Insurance is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6,636,005  in Samsung Life Insurance on September 14, 2024 and sell it today you would earn a total of  3,753,995  from holding Samsung Life Insurance or generate 56.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

T3 Entertainment Co  vs.  Samsung Life Insurance

T3 Entertainment

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in T3 Entertainment Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, T3 Entertainment sustained solid returns over the last few months and may actually be approaching a breakup point.

Samsung Life Insurance

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Life Insurance are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Samsung Life is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with T3 Entertainment and Samsung Life

The main advantage of trading using opposite T3 Entertainment and Samsung Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T3 Entertainment position performs unexpectedly, Samsung Life can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Samsung Life will offset losses from the drop in Samsung Life's long position.

The idea behind T3 Entertainment Co and Samsung Life Insurance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.